Ga Real Estate Academy Final Exam With Detailed Verified Answers (100% Correct Answers) Already Graded A+

GA REAL ESTATE ACADEMY FINAL EXAM WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) ALREADY GRADED A+ "A retailer installs special display counters to exhibit her products. At the end of the lease term, the retailer moves to another state, leaving the counters in the store. At this point the counters are considered which of the following? - CORRECT ANSWER Real property, since the trade fixtures were abandoned" "How is a legal life estate created? - CORRECT ANSWER By operation of law" "Which of the following is true of a homestead? - CORRECT ANSWER A homestead interest is a form of legal life estate." "Three people have identical rights in a property, share an indivisible interest, but may sell or transfer their interest without consent of the others. This type of ownership is - CORRECT ANSWER tenancy in common." "In a lien-theory state - CORRECT ANSWER the lender records a lien while the borrower retains title to the mortgaged property" "Five liens have been recorded against a certain house, in the following order: first mortgage, mechanic's lien, second mortgage, real estate tax lien, special assessment lien. Which lien will be the last one to be paid from the proceeds of the sale of the house? - CORRECT ANSWER Second mortgage lien" "A tenant obtains a low rental rate for a building, but agrees to pay all operating expenses. This is an example of a - CORRECT ANSWER net lease" "In accordance with the statute of frauds, - CORRECT ANSWER a five-year lease must be in writing to be enforceable." "A property owner in a development is required to have a shake roof. This requirement is most likely to come from - CORRECT ANSWER a deed restriction" "A master plan can be best described as - CORRECT ANSWER a fusion of land use laws and local land use objectives and strategies." "A zoning board of adjustment might give favorable consideration to a land use variance if - CORRECT ANSWER compliance would cause the owner undue and unjustified hardship." "A critical determinant of commercial and residential property demand in a market is - CORRECT ANSWER employment" "Two important tasks in identifying value through the cost approach are - CORRECT ANSWER estimating the cost of the land and the depreciation of the improvements." "In evaluating a loan application, a mortgage lender is most concerned about - CORRECT ANSWER the applicant's financial capability and the value of the collateral." "Lenders use the loan-to-value ratio as a guideline in underwriting because - CORRECT ANSWER the loan amount needs to be less than the property's value." "In the past, borrowers were often surprised by unexpected financing costs and charges at closing. This situation has been largely corrected through disclosure requirements mandated by which of the following laws? - CORRECT ANSWER Truth-in-Lending laws" "An important function of the secondary mortgage market is to - CORRECT ANSWER sell mortgage-backed securities in order to buy pools of loans." "The Veteran's Administration assists numerous qualified mortgage loan applicants because it - CORRECT ANSWER guarantees loans made by approved lenders." "A $300,000 loan has monthly payments of $2,000. Its annual interest rate is: - CORRECT ANSWER 8%" "Which of the following items would affect a homeowner's adjusted basis? - CORRECT ANSWER Installing a new furnace" "One investment advantage of owning a principal residence is that the owner may be able to - CORRECT ANSWER defer capital gain tax" "The taxable income from an investment property is estimated by using which of the following formulas? - CORRECT ANSWER Net income minus interest and depreciation" "A property sells for $180,000 one year after it was purchased. If the annual appreciation rate is 10%, how much did the original buyer pay for it? - CORRECT ANSWER $163,636" "An apartment building has an effective income of $150,000. Its bills total $64,000, and depreciation is an additional $12,000. Interest payments on the loan total $40,000, and principal payments are $5,000. What is the property's pretax cash flow? - CORRECT ANSWER $41,000" "A property has a net income of $50,000, interest payments of $35,000, principal payments of $3,000, and annual cost recovery of $7,000. The property's tax rate is 28%. What is the property's annual tax on income? - CORRECT ANSWER $2,240" "A principal residence is bought for $180,000. A new porch is added, costing $7,000. Five years later the home sells for $220,000, and the closing costs $18,000. What is the homeowner's capital gain? - CORRECT ANSWER $15000" "A certain investor wants an 11% return on investment from any real estate investment. A property priced at $360,000 has gross income of $60,000 and expenses of $22,000. "The president of a local bank wants to sell her home. She instructs an agent to inform a buyer moving to town that her bank, along with others, is about to curtail mortgage lending for the rest of the year. Hearing this, the buyer hurries to make a full-price offer in order to get the loan application in before the freeze. The seller accepts the offer. This contract is - CORRECT ANSWER voidable." "A seller accepts a buyer's counteroffer and mails the accepted contract to the buyer two days after receiving it. Because of confusion in the post office, it takes four days for the accepted contract to reach the buyer. In the meantime, the buyer's offer has expired. Which of the following is true? - CORRECT ANSWER The buyer is bound to the contract." "A buyer submits an offer to the seller. While the seller is considering the offer, the buyer calls and cancels the offer, saying the home was too expensive. The seller protests, claiming she was going to accept the contract. Which of the following is true? - CORRECT ANSWER The original offer is cancelled, and the protest means nothing." "A principal instructs an agent to inform any minority buyer that the property was just put under contract an hour ago and is no longer available. The agent refuses to comply. In this case, - CORRECT ANSWER the agent has not violated fiduciary duty" "A buyer representative locates a suitable property through an owner broker. The buyer buys the property, the seller pays a commission, and the two agents split the commission. In this instance, the owner broker is acting as - CORRECT ANSWER a single agent for the owner." "Under a special agency agreement, a broker is not authorized to - CORRECT ANSWER execute a contract for sale agreement." "Spenser, who works for selling broker Smith, sells a house listed by listing broker Adams. The house sells for $425,000. The cobrokerage split between Smith and Adams is 50-50. Spenser is on a 65% commission schedule with Smith. If the total commission rate is 7%, what is Spenser's commission? - CORRECT ANSWER $9,669" "A broker and salesperson agree to a 40-60 commission split. This commission rate - CORRECT ANSWER is probably a reflection of competitive commission rates" "The primary jeopardy of overpricing a property is that - CORRECT ANSWER the client's expectations may not be achieved" "Commingling is the practice of - CORRECT ANSWER mixing escrow funds with the broker's operating funds." "A business buyer wants to acquire a business in its totality, including the business identity and all rights, obligations, liabilities, and assets. The type of transaction that would accomplish this aim is - CORRECT ANSWER a stock sale" "In which of the following situations would Fair Housing laws allow discrimination? - CORRECT ANSWER A retirement community whose residents are all over 62 refuses to allow families with children to buy in the community." "During the executory period of a sale contract, the buyer enjoys which of the following interests? - CORRECT ANSWER equitable title" "A sale contract contains a onemonth financing contingency to allow the buyer to procure a loan. Thirty- two days later, the buyer still has no loan commitment. At this point the seller may - CORRECT ANSWER put the property back on the market." "While a property is under a contract for deed, the buyer, or vendee, takes possession of the property and makes timely payments of principal and interest. At the end of the term, the vendee obtains a loan and uses the funds to pay off the vendor. Given these circumstances, what option does the seller have? - CORRECT ANSWER He may offer to repurchase the property after conveying title." "Which of the following transactions requires a large lender (more than five loans per year) to use the CFPB Closing Disclosure form? - CORRECT ANSWER The loan is for a 30- year fixed first mortgage secured by a house." "The Real Estate Settlements and Procedures Act prohibits - CORRECT ANSWER a lender from paying a fee to a broker for referring a borrower to the lender" "Which of the following are examples of items typically prorated between seller and buyer at closing? - CORRECT ANSWER Real estate taxes" "Which of the following items are paid in arrears? - CORRECT ANSWER Interest and taxes" "A sale transaction on rental property closes on December 16. The landlord received the December rent of $713 on December 1. Assuming the closing day is the buyer's, and that the 365-day method is used for prorating, which of the following entries would appear on the settlement statement? - CORRECT ANSWER Credit buyer $368.00" "The risk management strategy that aims to decrease the probability or the severity of a potential loss is called - CORRECT ANSWER risk reduction." "Exceeding the limits of the authority granted is a major risk in - CORRECT ANSWER the fulfilling of listing agreements." "To shift some of the risk inherent in recommending vendors to consumers, a licensee is advised to - CORRECT ANSWER present a broad range of choices and allow the consumer to make the selection." “Which of the following ways of specializing is common in the real estate brokerage business? - CORRECT ANSWER By type of property" "Which of the following is included in the legal concept of land? - CORRECT ANSWER A lake" "A property abuts a non-navigable stream. What does the owner own? - CORRECT ANSWER Underlying land to the middle of the waterway" "A condominium estate is distinguished by - CORRECT ANSWER Fee simple ownership of a unit and an undivided share of the common areas" "An easement by prescription requires that - CORRECT ANSWER the use be continuous, open, and hostile for a required period of time." "For a conveyance by deed between private parties to be valid, the deed must be - CORRECT ANSWER accepted by the grantee." "If a person dies with legal heirs and has left no valid will, what happens to real property owned by that person? - CORRECT ANSWER It is probated and passes to the heirs by laws of descent." "A miner openly lives and prospects on a 20,000-acre ranch. After twenty years, the owner notices the miner and kicks him off the property. The miner makes a claim of ownership to the property. This claim will likely be - CORRECT ANSWER upheld, because the possession was not concealed." "What are the dimensions of a township? - CORRECT ANSWER 6 miles by 6 miles" "A tract of land is described as the W 1/2 of the N 1/2 of the NE 1/4 of Section 16. What is its acreage? - CORRECT ANSWER 40 acres" "As an economic product, real estate is unique because - CORRECT ANSWER the demand must come to the supply" "If rents are declining in office properties in a market, it is likely that - CORRECT ANSWER supply exceeds demand for space." "Highest and best use of a property is that use which - CORRECT ANSWER is legal, physically and financially feasible, and most productive." "A strength of the sales comparison approach to value is that - CORRECT ANSWER the approach is based on the principle of substitution." "A major employer relocates, leaving many homes in an area vacant and unmaintained. This is an example of - CORRECT ANSWER incurable economic obsolescence." "A lender determines that a homebuyer can afford to borrow $120,000 on a mortgage loan. The lender requires an 80% loan-to-value ratio. How much can the borrower pay for a property and still qualify for this loan amount? - CORRECT ANSWER $150,000" "A borrower grosses $4,000 per month and pays $600 monthly for debt obligations. What monthly payment for housing expenses (principal, interest, taxes, insurance) can this person afford based on an FHA debt ratio of 41%? - CORRECT ANSWER $1040" "What is meant by "opportunity cost" when speaking of real estate as an investment? - CORRECT ANSWER The return an investor could reasonably expect to earn from competing investments." Approximately how much too high or too low is the price of this property for the investor to obtain her desired return exactly? - CORRECT ANSWER $15,000 overpriced" "The function of a board of equalization is to - CORRECT ANSWER minimize wide discrepancies of assessed values within the district." "A tax rate is derived by - CORRECT ANSWER dividing the tax requirement by the tax base." "A special assessment tax differs from other tax levies in that - CORRECT ANSWER properties that receive no benefit do not pay the tax." "A homeowner's rented residence has an assessed valuation of $150,000, and a market value of $170,000. The homestead exemption is $25,000. Tax rates for the property are 7 mills for schools; 3 mills for the city; 2 mills for the county; and 1 mill for the local community college. What is the homeowner's tax bill? - CORRECT ANSWER $1,625" "An agent fails to discover crumbling wallboard on the basement ceiling beneath a bathroom. The agent sells the property, and the buyer later sues the agent for not discovering and disclosing a clearly visible and obvious problem. In this case, the agent - CORRECT ANSWER has an exposure to negligent misrepresentation." "The nature and import of the agency relationship should be disclosed to the client - CORRECT ANSWER prior to completing a listing agreement." "A landlord agrees to pay a broker for procuring a tenant unless someone else finds the tenant first. This is an example of a(n) - CORRECT ANSWER open listing" "A property owner wants to put $240,000 in the bank after selling a property and accounting for all expenses. A broker finds a buyer and sells the property for $280,000. Closing costs come to $10,000, not including the broker's commission. According to agreement, the remainder of the amount over $240,000 goes to the broker as commission. The listing agreement is probably a(n) - CORRECT ANSWER net listing" "A family is looking for a home in a certain price range. The wife suggests several listings on the east side of town, and the agent agrees to show the family the suggested properties. En route to the targeted neighborhood, the agent drives a certain route to show the family certain retail services and two schools. What has this agent done wrong? - CORRECT ANSWER He has done nothing wrong" "At the direction of a seller-client, an agent tells a pregnant working woman that the property is not in a good neighborhood for a single woman, particularly if she regularly works late hours. The neighborhood has an increasing crime rate, and people are moving out. What has this agent done wrong? - CORRECT ANSWER Engaged in steering" "state, leaving the - CORRECT ANSWER " "counters in the - CORRECT ANSWER " "store. At this point - CORRECT ANSWER " "the counters are - CORRECT ANSWER " "considered which of - CORRECT ANSWER " "the following? - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 Trade fixtures, and - CORRECT ANSWER " "therefore real property - CORRECT ANSWER " "Trade fixtures and - CORRECT ANSWER " "therefore personal - CORRECT ANSWER " "property - CORRECT ANSWER " "Trade fixtures and - CORRECT ANSWER " "therefore personal - CORRECT ANSWER " "property - CORRECT ANSWER " "Real property, since the - CORRECT ANSWER " "trade fixtures were - CORRECT ANSWER " "abandoned - CORRECT ANSWER " "Personal property that - CORRECT ANSWER " "must be returned to the - CORRECT ANSWER " "retailer - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Incorrect - CORRECT ANSWER " "How is a legal life - CORRECT ANSWER " "estate created? - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 By an owner's voluntary - CORRECT ANSWER " "grant - CORRECT ANSWER " "By operation of law - CORRECT ANSWER " "Through the four unities Through the four unities - CORRECT ANSWER " "Through a defeasible - CORRECT ANSWER " "conveyance - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Incorrect - CORRECT ANSWER " "Which of the - CORRECT ANSWER " "following is true of a - CORRECT ANSWER " "homestead? - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 - CORRECT ANSWER " "A homestead interest - CORRECT ANSWER " "can be conveyed by - CORRECT ANSWER " "one spouse. - CORRECT ANSWER " "A homestead interest - CORRECT ANSWER " "cannot be exempt from - CORRECT ANSWER " "creditors. - CORRECT ANSWER " "A homestead interest is - CORRECT ANSWER " "a form of legal life - CORRECT ANSWER " "estate. - CORRECT ANSWER " "A homestead is any - CORRECT ANSWER " "privately owned singlefamily residence. - CORRECT ANSWER " "A homestead is any - CORRECT ANSWER " "privately owned singlefamily residence. - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Correct - CORRECT ANSWER " "Three people have - CORRECT ANSWER " "identical rights in a - CORRECT ANSWER " "property, share an - CORRECT ANSWER " "indivisible interest, - CORRECT ANSWER " "but may sell or - CORRECT ANSWER " "transfer their - CORRECT ANSWER " "interest without - CORRECT ANSWER " "consent of the - CORRECT ANSWER " "others. This type of - CORRECT ANSWER " "ownership is - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 joint tenancy. - CORRECT ANSWER " "tenancy by the - CORRECT ANSWER " "entireties. - CORRECT ANSWER " "estate in severalty. - CORRECT ANSWER " "tenancy in common. tenancy in common. - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Correct - CORRECT ANSWER " "A condominium - CORRECT ANSWER " "estate is - CORRECT ANSWER " "distinguished by - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 - CORRECT ANSWER " "ownership of a share in - CORRECT ANSWER " "an association and a - CORRECT ANSWER " "condominium lease on - CORRECT ANSWER " "the owned unit. - CORRECT ANSWER " "tenancy in common - CORRECT ANSWER " "interest in airspace and - CORRECT ANSWER " "common areas of the - CORRECT ANSWER " "property. - CORRECT ANSWER " "fee simple ownership of - CORRECT ANSWER " "a unit and an undivided - CORRECT ANSWER " "share of the common - CORRECT ANSWER " "areas. - CORRECT ANSWER " "fee simple ownership of - CORRECT ANSWER " "a unit and an undivided - CORRECT ANSWER " "share of the common - CORRECT ANSWER " "areas. - CORRECT ANSWER " "fee simple ownership of - CORRECT ANSWER " "an equal share of the - CORRECT ANSWER " "entire property. - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Incorrect - CORRECT ANSWER " "An easement by - CORRECT ANSWER " "prescription - CORRECT ANSWER " "requires that - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 - CORRECT ANSWER " "the use be continuous, - CORRECT ANSWER " "known, and permitted - CORRECT ANSWER " "by the owner for a - CORRECT ANSWER " "period of time. - CORRECT ANSWER " "the use be continuous, - CORRECT ANSWER " "known, and permitted - CORRECT ANSWER " "by the owner for a - CORRECT ANSWER " "period of time. - CORRECT ANSWER " "the use be continuous, - CORRECT ANSWER " "open, and hostile for a - CORRECT ANSWER " "required period of time. - CORRECT ANSWER " "the owner of an - CORRECT ANSWER " "adjoining property be - CORRECT ANSWER " "landlocked. - CORRECT ANSWER " "the owner of the - CORRECT ANSWER " "affected property be an - CORRECT ANSWER " "adverse possessor. - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Correct - CORRECT ANSWER " "In a lien-theory state - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 - CORRECT ANSWER " "liens are recorded in - CORRECT ANSWER " "trusts as opposed to - CORRECT ANSWER " "title records. - CORRECT ANSWER " "Prepared by Litmos at 5/29/2021 7:54:27 PM 3 of 33the lender records a lien - CORRECT ANSWER " "while the borrower - CORRECT ANSWER " "retains title to the - CORRECT ANSWER " "mortgaged property. - CORRECT ANSWER " "the lender records a lien - CORRECT ANSWER " "while the borrower - CORRECT ANSWER " "retains title to the - CORRECT ANSWER " "mortgaged property. - CORRECT ANSWER " "liened properties are - CORRECT ANSWER " "foreclosed by strict - CORRECT ANSWER " "foreclosure. - CORRECT ANSWER " "trustees retain title - CORRECT ANSWER " "during a mortgage - CORRECT ANSWER " "period. - CORRECT ANSWER " "Question Type: - CORRECT ANSWER " "Multiple Choice - CORRECT ANSWER " "Incorrect - CORRECT ANSWER " "Five liens have been - CORRECT ANSWER " "recorded against a - CORRECT ANSWER " "certain house, in the - CORRECT ANSWER " "following order: first - CORRECT ANSWER " "mortgage, - CORRECT ANSWER " "mechanic's lien, - CORRECT ANSWER " "second mortgage, - CORRECT ANSWER " "real estate tax lien, - CORRECT ANSWER " "special assessment - CORRECT ANSWER " "lien. Which lien will - CORRECT ANSWER " "be the last one to be - CORRECT ANSWER " "paid from the - CORRECT ANSWER " "proceeds of the sale - CORRECT ANSWER " "of the house? - CORRECT ANSWER " "Actual Answer Answer Given - CORRECT ANSWER " "Weight: 1 Special assessment lien - CORRECT ANSWER " "Mechanic's lien Mechanic's lie - CORRECT ANSWER "